Jubilee Gold: How not to run a Company
Over the last fifteen years of my involvement in the mining industry, I have seen many bad companies, but none worse than Jubilee Gold (JUB; C$0.90). I am not encouraging you to buy it, but I want to explain why I shouldn’t have bought it. You cannot buy anyway because all the shares are controlled by the CEO, Jeffrey Becker, and me.
Shares outstanding: 7,961,578
CEO’s ownership: 7,400,091 (92.94%)
Shares not owned by the CEO: 561,487
He owned 95% of the company until recently. Despite having C$8.2 million in cash and liquid investments, JUB decided to do financing on 25th September 2020 of C$84,500 (at C$0.65 for 130,000 shares) for one individual whose name was not disclosed. This destroyed my influence, which was close to 50% of the minority interest. Without at least 50% of minority votes going his way, the CEO could not take the company private, which he desperately wants to. Of course, he does not want to pay the minority shareholders either.
JUB has no website. CEO’s daughter, Summer Becker (a beautician), and his son, Warren Becker (a salesman at Bell Canada), are on the company’s board. The email that goes out with their news releases is fake and bounces back. The company’s telephone number reaches someone who knows nothing. And the CEO never returns a call or responds to emails. So much for a public company.
For the AGM that was to happen tomorrow, 11th December 2020, documents were uploaded on Sedar three days back, something that should have been done three weeks back according to legal requirements. The reason? They surreptitiously wanted a vote to take the company private and give minority shareholders crumbs of C$0.65 per share.
Ironical, isn’t it that the person who gave money to JUB recently generously wanted no more than his original money back?
The last AGM of JUB happened on 19th June 2018. How they managed not to do a yearly AGM is beyond me. What is known is that 11th December 2020’s AGM has been adjourned because it seems JUB realized that there is a limit to how much they can stretch the law.
Here is my short valuation of JUB:
Cash & liquid investments: C$8.2 million
Value of assets using their flawed fairness report: C$10.3 million
Total value using their flawed fairness report: C$18.8 million or C$2.36 per share
Alas, there is a huge error in their fairness opinion. They have priced NSR royalty on the Springpole project at $0.098 million, something actually worth C$30 million, an additional C$3.77 per share. And the CEO knows it.
I have given more color to the story in this linked conversation with Cory Fleck, and mentioned two investment opportunities.
Finally, JUB still has to go through the motion of adjourning the meeting tomorrow. If you care, you can join at 10 am EST on 11th December 2020 at +1-416-849-4286; access code, 0091269. Of course, as you can guess, I have a very selfish interest in attracting people to come to tomorrow’s meeting and to follow this case.
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